Medicare Payment Policy

CMs’s revisions to the snF pps
Although CMS has taken steps to enhance payments
for medically complex care, it has not revised the basic
design of the PPS to more accurately pay for NTAs or
to base payments for rehabilitation therapy services on
patient care needs. In 2010, CMS changed the definitions
of the existing case-mix groups and added 13 case-mix
groups for medically complex days. 6 At the same time,
CMS shifted program dollars away from therapy care and
toward medically complex care (Centers for Medicare &
Medicaid Services 2010). After these changes, between
2010 and 2011, the share of days classified into medically
complex groups increased from 5 percent to 7 percent. In
addition, in 2010 and 2011, CMS made important changes
to more accurately pay for rehabilitation therapy—
including lower payments for therapy furnished to
multiple beneficiaries treated at the same time rather than
in one-on-one sessions and requiring providers to reassess
patients when the provision of therapy changed or stopped
(that would, in turn, change the assignments to case-mix
groups). 7
SNFs continue to be adept at modifying their practices
in response to changes in policy—varying the amount
of therapy provided and deciding whether they furnish
therapy individually or in groups—and they will most
likely continue to do so. For example, in 2010, when
Medicare payments were lowered by 1.1 percent, total
spending increased almost 5 percent from 2009. SNFs
achieved this increase in part by providing more intensive
rehabilitation that resulted in more days being classified
into the higher intensity case-mix groups, from 65 percent
to 69 percent. When CMS lowered its payments for
therapy provided to groups of beneficiaries, SNFs shifted
their mix of modalities to furnish therapy in one-on-one
sessions almost exclusively. Individual therapy now
makes up over 99 percent of therapy furnished, up from
74 percent in 2006 (Centers for Medicare & Medicaid
Services 2012).
Provider adjustments to rate reductions in 2012 have
included both cost reduction and revenue enhancement
strategies. Cost reductions have focused on nonpatient
care areas, such as corporate overhead, administration,
and outsourcing of dietary, laundry, and housekeeping
services. Some providers have improved the efficiency
of therapists with the use of hand-held devices. This
technology has reduced the time needed to complete
paperwork and allowed therapists to bill more hours per
shift (Kindred Healthcare 2012b). Increasing occupancy
is another strategy (Ensign Group 2012). Revenue
enhancements have targeted improving payer mix (i.e.,
lowering Medicaid days by expanding commercial days)
and continuing to seek short-term, high-rehabilitation
Medicare patients (Ensign Group 2012, Extendicare 2012,
Kindred Healthcare 2012c, Skilled Healthcare 2012, Sun
Healthcare Group 2012).
With respect to the Commission’s recommendations to
reform the PPS, CMS continues to evaluate a possible
NTA component and in 2012 began a multiyear study
to consider alternative PPS designs for therapy services.
To establish a separate NTA component, CMS will need
to complete its research before deciding whether to
pursue this option. CMS is likely to exclude services that
are especially discretionary (e.g., oxygen therapy) and
is updating its analysis to reflect more recent practice
patterns. In fall 2012, CMS engaged a contractor to study
possible reforms to therapy payments within the PPS,
including (but not limited to) episode-based payments
and payments for therapy services based on patient
characteristics (as the Commission recommended). CMS
does not have the authority to establish an outlier policy,
rebase payment rates, or update the SNF rates using
alternatives to the market basket, and it therefore has not
aggressively pursued these options. Congressional action
is required to make these changes to the SNF PPS.
Are Medicare payments adequate in
2013?
To examine the adequacy of Medicare’s payments, we
analyzed access to care (including the supply of providers
and volume of services), quality of care, providers’ access
to capital, Medicare payments in relation to costs to treat
Medicare beneficiaries, and changes in payments and
costs. We also compared the performance of SNFs with
relatively high and low Medicare margins and efficient
SNFs with other SNFs.
Beneficiaries’ access to care: Access is stable
for most beneficiaries
We do not have direct measures of access. Instead, we
consider the supply and capacity of providers and evaluate
changes in volume. We also examine the mix of SNF days
to assess the shortcomings of the PPS that can result in
delayed admission for certain types of patients.
Report to the Congress: Medicare Payment Policy | March 2013
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